Turkish and Portuguese firms to start building Tanzania’s grand railway

07 February 2017

Tanzania has chosen Turkish construction company Yapi Merkezi Insaat VE Sanayi As and Portuguese firm Mota-Engil to build a US$1.1-bn railway to landlocked neighbours Burundi and Rwanda, Bloomberg reports.

Anonymous sources said the contract is to build about 400 km of track and that each company would hold a 50% stake in the joint venture.

If confirmed, the contract award casts doubt on the role of China in Tanzania’s rail development. Last year China’s Export Import Bank agreed a US$7.6bn loan to build a standard gauge railway across Tanzania from the port of Dar es Salaam to neighbours inland.

When China lends money for infrastructure, it is normally a condition that Chinese firms will be awarded the construction work. Following that pattern, the year before, Tanzania awarded contracts worth US$9bn to a consortium of Chinese firms led by China Railway Materials to build the grand line.

But those contracts were cancelled by the new president John Magufuli in early 2016, and no more progress has since been made.

Last month President Magufuli asked Turkish President Recep Tayyip Erdogan for loans to finance the railway.

One source told Bloomberg that Yapi Merkezi has asked the Turkish government to provide guarantees for financing the project.

Mota-Engil is Portugal’s biggest construction company and derives almost a third of its revenue from Africa, according to its website, Bloomberg reported.

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